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Big if true. Anyone confirm this?
Source? this is huge
bolo up Sham Wow
WSJ confirmed this morning. This was only the purchase of Alliance's management book & did not include their development business. Greystar paid around $200MM for the management rights of roughly 130,000 units.
https://www.wsj.com/articles/rental-apartment-operator-greystar-bulks-u…
Yeah my guess was ~3X sales ($2000 avg rent, 2% mgmt fee). What's the margin like in a 3rd party mgmt business?
Think you're pretty close. The avg. rent in their mgmt book, according to Axio, is $1,780/u, assume 95% occupancy and you're at $1,691, plus 10% other income and you're at $1,860, multiply that by 130,000 units and you're at ~$2.9B of property revenue, 2% of that (probably a low fee) is ~$58m, and at a price of $200m that is a 3.45x multiple. None of that counts for corporate overhead and all of that so that will out you between 2-3x.
The mgmt business is a terrible business. Management contracts can be cancelled with 30 days notice and the margins are 10%-15%.
The evergreen continues to get more green. Underwriting for big acquisitions like that takes a consistent stream of development and asset management fees which they’ve also diversified within multifamily (apartments, active adult, student/P3) and internationally/globally, taking advantage of hard trends and first mover. The growth continues with bets in adjacencies and core business. Next 10 years will be interesting.
Thanks for the heads up.
Great, now all of our Alliance managed properties will turn to Greystar dogshit
Haha I know a solid management company if y'all are looking to switch
Alliance is already dogshit so wouldn't be too worried about the transition
Greystar is ehh on the property management front.
Lived in a Greystar managed property. Do not recommend.
I was the same for a few years here in LA. But to address their overhead, when the property managers live in the building and takes a reduced price unit, their overhead isn’t all that crazy. They do minimal maintenance and use the cheapest materials possible.
They are in the business of polishing turds ...
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